As more and more people turn to blockchain, governments around the world are facing certain difficulties that must be addressed before blockchain becomes the default. Here are the top three challenges confronting governments today:

The Lack of Knowledge on Blockchain

Many government officials are unaware of how websites are built and maintained. Because blockchain is a new technology, many of the skills required to run sites using blockchain are in short supply. The cost of training employees and implementing blockchain technology may be more than most government budgets can afford. The arrival of the Covid-19 pandemic has caused many governments to tighten their budgets even more, making building a blockchain-based site even more out of reach.

Replacing or Adapting Current Systems to Blockchain Can Be Difficult

Blockchain may be difficult to replace or adapt to because there is a need for widespread adoption of the technology for it to be effective. Due to the inability of businesses such as banks and other industries to replace their current technology with blockchain technology, governments may not be able to implement the technology effectively. Currently, only 29% of organizations are willing to try blockchain or fully implement it.

As organizations begin to cooperate with each other to address the hardships of replacing or adapting current systems to blockchain, some solutions have been and will continue to be developed. The partnership between organizations allows for the free flow of ideas and solutions.

During the pandemic, some organizations that have adopted the use of blockchain found that they were able to track package shipments more efficiently, which helped to not only reduce the use of paper logs but also secure the supply chain for their products and services and ensure security for their data.

Governments Lack Trust in Blockchain

While some organizations have been at the forefront of blockchain adoption and use, many governments still lack trust in the technology. Within the lack of trust issues, there are two sub-issues that must be addressed: the lack of trust in the security of blockchain and organizations that may not trust other organizations on a blockchain network.

Even though every transaction made on blockchain is secure and private as well as verified, due to the decentralized nature of blockchain, there is no central authority that can validate and verify the transactions. The consensus algorithms which drive the common agreement about the present state of the ledger distribution for the entire network are the central part of blockchain technology. This central part makes sure that for every new block added to the ledger, the new block is the only version of the truth that is agreed upon by all nodes within the blockchain. However, businesses are unable to trust this central part. They prefer to put their trust in a private blockchain where the users are all known. To build trust among businesses who are just starting to adopt blockchain, one solution was developed, which shows how peers and competitors could work together to find a solution to shared challenges. Rather than using anonymous public blockchains, some businesses are turning to private blockchains, in which members are identified by cryptographic identities and are known to the private blockchain network. Therefore, those using cryptographic identities can access the permissioned blockchain technology, which offers privacy, traceability, and immutability of important documents.

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